Kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for...
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Kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for US$350,000 on January 1, 2009, when the exchange rate for the Canadian dollar was US$.70. The fair value of the net assets of Hastie was equal to their book value of C$450,000 (Canadian dollars) on thedate of acquisition. Any excess cost over fair value was attributed to an unrecorded patent with aremaining life of five years. The functional currency of Hastie is the Canadian dollar.For the year ended December 31, 2009, Hastie's translated net income was $25,000. The averageexchange rate for the Canadian dollar during 2009 was US$.68, and the 2009 year-end exchange rate wasUS$.65.
1. Amortization of the patent, translated, for 2009 would be
A) $7,000.
B) $10,000.
C) $6,800.
D) $9,000.
E) $6,500
2. Compute the amount of the patent reported on the consolidated balance sheet at December 31, 2009.
A) $28,200.
B) 428,000.
C) $35,000.
D) $27,200.
E) $26,000
3. Kennedy's share of Hastie's net income for 2009 would be
A) $18,000.
B) $15,000.
C) $18,200.
D) $16,000.
E) $18,500.
Please show the calculation.
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